| This study assesses the contributions of capital input, labor output, and productivity change to economic growth in the world's seven leading industrialized market economies during the years from 1960 to 1989. Those economies, in order of size, are the United States, Japan, (West) Germany, Italy, France, the U.K., and Canada. In addition, the study attributes differences in output levels to differences in levels of capital and labor input and multifactor productivity.;Capital is disaggregated into 21 categories based on asset type and ownership sector, and labor is divided into 20 categories based on the sex, education, and employment status of the worker. This makes it possible to distinguish changes in output resulting from capital-capital and labor-labor substitution, as well as growth resulting from capital-labor substitution and productivity growth.;Three of the most significant findings are: (1) Capital input growth was the most significant contributor to output growth in five of the seven countries: the U.S., Canada, France, Germany, and Japan. Productivity was a more important growth source in the U.K. and Italy. (2) In most instances, changes in productivity growth rates have been the most important contributor to changes in output growth rates. A notable exception is the slowdown of Japanese growth after 1973, which was predominantly attributable to a slowdown in the growth of capital input. (3) By 1974, multifactor productivity levels in Canada, France, and Italy had converged with that of the United States. Convergence of the British productivity level with that of the U.S. occurred in 1982. |
